Public debt up to $39.6B

Press, 17 May 1989, Page 35

Public debt up to $39.6B

PA Wellington The Government's public debt rose slightly to $39.6 billion in the year to March but the overseas portion of that dropped, the Minister of Finance, Mr Caygill, said. Total debt was up from $398 in the year to March, 1988 but it would be reduced from the current level, Mr Caygill said at the launching of Citibank’s retail bank in Auckland on Monday. The public debt was still well below the $428 recorded for the March, 1987 year. The internally funded portion of the debt increased to $238 in the latest March year (from $21.88 in the previous year). Mr Caygill said the rise resulted from a policy of funding internally debt which was previously held overseas, together with changes to the way some Govern-

ment bonds were recorded in the public accounts. Government policy was to use the proceeds of State asset sales to pay off overseas debt, and Mr Caygill said in the latest March year the overseas public debt fell to $16.68 ($17.38). The over-all rise in the latest year did not portray the full picture of the Government’s debt repayment policy, he said. During the year depreciation of the New Zealand dollar added $6OO million to overseas debt in the public account. "To achieve the S7OOM reduction the Government actually repaid $1.38 offshore. “At the same time, the Government repaid 51.358 of major project debt, leaving about S2B in foreign currencies owing.” Mr Caygill said there was also repayment of S7OOM of the Reserve Bank’s

outstanding offshore debt of $1.28. The net effect in the overseas public debt in the latest March year was a reduction of $1.98. Mr Caygill said future debt reduction would come from continued assets sales, and Budget surpluses as the Government balanced the books. “The Government is committed to achieving its target announced last year of repaying a third of its total debt — then -about $428 — within five years. “Already the Government is well on its way to selling the first S2B worth of assets towards this aim." AU the regulatory approvals for asset sales needed to achieve that S2B gain should be achieved by September, he said. Consent has yet to be attained from the Commerce Commission for Fletcher Challenge to buy the Crown’s Maui gas and Synfuels interests.